Peer effects and inequalities in technology uptake. Evidence from a large-scale renovation subsidy programme

The energy transition's success in addressing climate change depends on several factors, including the affordability of new technologies and the influence of peers within communities. However, concerns about affordability raise questions about how economic inequalities shape peer effects and whether they create barriers to equitable adoption. To this end, we explore how inequalities influence peer effects in the uptake of renewable heating sources. We leverage over 260,000 observations from unique and unpublished microdata from the Polish Clean Air Priority Programme – one of the largest retrofit schemes in Europe. Our results show that peer effects accelerate technology uptake, with each additional installation increasing the likelihood of subsequent adoption by 0.014 pp. This amounts to a 7.7 % aggregate increase in the probability of installations in the average 1-km grid cell attributable to peer spillovers. Peer influence is affected by economic inequality. In more economically homogeneous areas, affluent individuals considerably impact their peers. In areas with higher economic disparities, this influence diminishes. Our findings highlight the role of heating technology type and adopter wealth in shaping peer effect magnitude. Less wealthy adopters of biomass stoves emerge as a significant driver of peer influence, especially in areas with lower income inequality. We advise direct transfers to address technology adoption inequalities, leveraging social capital in low-inequality areas and adopting individualised strategies in high-inequality areas.